10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File Number: 001-32449

VITRAN CORPORATION INC.

(Exact name of registrant as specified in its charter)

Ontario, Canada	98-0358363
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

185 The West Mall, Suite 701, Toronto, Ontario, Canada, M9C 5L5

(Address of principal executive offices and zip code)

416-596-7664

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 16,399,241 common shares outstanding at July 18, 2012

TABLE OF CONTENTS

Item		Page
PART I	Financial Information
1.	Financial Statements		3
2.	Management’s Discussion and Analysis		12
3.	Quantitative and Qualitative Disclosures About Market Risk		19
4.	Controls and Procedures		19
PART II	Other Information
1.	Legal Proceedings		20
1. A	Risk Factors		20
2.	Unregistered Sale of Equity and Use of Proceeds		20
3.	Defaults Upon Senior Securities		20
4.	Mine Safety Disclosures		20
5.	Other Information		20
6.	Exhibits and Reports on Form 8-K		21

2

Part I. Financial Information

Item 1: Financial Statements

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

(In thousands of United States dollars except for per share amounts)

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Revenue	$	213,097		$	208,881		$	420,845		$	394,269
Operating expenses:
Salaries, wages and other employee benefits		84,872			79,877			168,087			149,494
Purchased transportation		31,968			34,625			63,445			64,617
Depreciation and amortization		4,084			4,040			8,159			8,397
Maintenance		10,205			8,994			19,876			17,086
Rents and leases		11,768			9,175			23,018			17,256
Purchased labor and owner operators		18,671			20,259			36,656			38,584
Fuel and fuel-related expenses		35,732			36,074			72,967			66,204
Other operating expenses		18,107			16,145			35,039			31,470
Other income		(126	)		(67	)		(50	)		(105	)
Total operating expenses	$	215,281		$	209,122		$	427,197		$	393,003
Income (loss) from operations before undernoted		(2,184	)		(241	)		(6,352	)		1,266
Interest expense, net		1,330			1,311			2,641			2,653
Loss from operations before income taxes		(3,514	)		(1,552	)		(8,993	)		(1,387	)
Income tax expense		649			745			986			1,134
Net loss	$	(4,163	)	$	(2,297	)	$	(9,979	)	$	(2,521	)
Loss per share:
Basic and Diluted	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)
Weighted average number of shares:
Basic		16,399,241			16,330,041			16,383,175			16,322,748
Diluted		16,399,241			16,330,041			16,383,175			16,322,748

See accompanying notes to consolidated financial statements

3

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of United States dollars)

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Net loss	$	(4,163	)	$	(2,297	)	$	(9,979	)	$	(2,521	)
Other comprehensive income (loss):
Change in foreign currency translation adjustment (net of income tax expense (recovery) of $1 and $(5) for the three and six months ended June 30, 2012; 2011 – $37 and $254)		(112	)		119			(47	)		1,007
Change in unrealized fair value derivatives designated as cash flow hedges (net of income taxes of $42 and $94 for the three and six months ended June 30, 2011)		—			109			—			241
Other comprehensive income (loss)	$	(112	)	$	228		$	(47	)	$	1,248
Comprehensive loss	$	(4,275	)	$	(2,069	)	$	(10,026	)	$	(1,273	)

See accompanying notes to consolidated financial statements

4

VITRAN CORPORATION INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of United States dollars)

	June 30, 2012			Dec. 31, 2011
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	1,311		$	1,204
Accounts receivable		90,709			83,479
Inventory, deposits and prepaid expenses		11,614			11,872
Deferred income taxes		172			175
Total current assets		103,806			96,730
Property and equipment		129,967			125,219
Intangible assets		4,575			5,805
Goodwill		14,307			14,314
Total assets	$	252,655		$	242,068
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	87,597		$	80,818
Income and other taxes payable		662			1,266
Current liabilities of discontinued operations		—			61
Current portion of long-term debt		6,225			6,817
Total current liabilities		94,484			88,962
Long-term debt		81,799			67,072
Deferred income taxes		1,047			1,061
Shareholders’ equity:
Common shares, no par value, unlimited authorized, 16,399,241 and 16,331,241 issued and outstanding at June 30, 2012 and December 31, 2011, respectively		99,954			99,746
Additional paid-in capital		5,504			5,334
Accumulated deficit		(34,893	)		(24,914	)
Accumulated other comprehensive income		4,760			4,807
Total shareholders’ equity		75,325			84,973
Contingent liabilities (note 6)
Total liabilities and shareholders’ equity	$	252,655		$	242,068

See accompanying notes to consolidated financial statements

5

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands of United States dollars, except share amounts)

											Accumulated
					Additional						Other			Total
	Common shares				Paid-in			Accumulated			Comprehensive			Shareholders’
	Shares		Amount		Capital			Deficit			Income			Equity
December 31, 2011		16,331,241	$	99,746	$	5,334		$	(24,914	)	$	4,807		$	84,973
Shares issued upon exercise of employee stock options		68,000		208		(57	)		—			—			151
Net loss		—		—		—			(9,979	)		—			(9,979	)
Other comprehensive loss		—		—		—			—			(47	)		(47	)
Share-based compensation		—		—		227			—			—			227
June 30, 2012		16,399,241	$	99,954	$	5,504		$	(34,893	)	$	4,760		$	75,325

											Accumulated
					Additional						Other		Total
	Common shares				Paid-in			Accumulated			Comprehensive		Shareholders’
	Shares		Amount		Capital			Deficit			Income		Equity
December 31, 2010		16,300,041	$	99,658	$	4,838		$	(10,901	)	$	5,252	$	98,847
Shares issued upon exercise of employee stock options		30,000		85		(5	)		—			—		80
Net loss		—		—		—			(2,521	)		—		(2,521	)
Other comprehensive income		—		—		—			—			1,248		1,248
Share-based compensation		—		—		261			—			—		261
June 30, 2011		16,330,041	$	99,743	$	5,094		$	(13,422	)	$	6,500	$	97,915

See accompanying notes to consolidated financial statements

6

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of United States dollars)

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Cash provided by (used in):
Operations:
Net loss	$	(4,163	)	$	(2,297	)	$	(9,979	)	$	(2,521	)
Items not involving cash from operations:
Depreciation and amortization		4,084			4,040			8,159			8,397
Deferred income taxes		17			64			(8	)		59
Share-based compensation expense		100			119			227			261
Gain on sale of property and equipment		(126	)		(67	)		(50	)		(105	)
Change in non-cash working capital components		3,817			2,270			(797	)		(3,704	)
Continuing operations		3,729			4,129			(2,448	)		2,387
Discontinued operations		(30	)		(1,342	)		(61	)		(526	)
		3,699			2,787			(2,509	)		1,861
Investments:
Purchases of property and equipment		(5,761	)		(4,268	)		(7,543	)		(6,608	)
Proceeds on sale of property and equipment		1,026			265			1,567			329
Acquisition of business assets		—			—			—			(1,737	)
		(4,735	)		(4,003	)		(5,976	)		(8,016	)
Financing:
Change in revolving credit facility and bank overdraft		1,440			5,438			10,980			14,615
Repayment of long-term debt		(489	)		(3,000	)		(733	)		(6,000	)
Repayment of capital leases		(846	)		(939	)		(1,787	)		(1,910	)
Issue of common shares upon exercise of employee stock options		—			—			151			80
		105			1,499			8,611			6,785
Effect of foreign exchange translation on cash		65			(283	)		(19	)		(630	)
Increase (decrease) in cash and cash equivalents		(866	)		—			107			—
Cash and cash equivalents, beginning of period		2,177			—			1,204			—
Cash and cash equivalents, end of period	$	1,311		$	—		$	1,311		$	—
Change in non-cash working capital components:
Accounts receivable	$	649		$	(5,057	)	$	(7,230	)	$	(21,872	)
Inventory, deposits and prepaid expenses		1,706			1,791			258			(100	)
Income and other taxes payable		493			659			(604	)		365
Accounts payable and accrued liabilities		969			4,877			6,779			17,903
	$	3,817		$	2,270		$	(797	)	$	(3,704	)
Supplemental disclosure of non-cash transactions:
Capital lease additions		4,099			—			5,745			—

See accompanying notes to consolidated financial statements

7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of United States dollars except for per share amounts)

1. Accounting Policies

The interim consolidated financial statements have been prepared in accordance with the rules prescribed for filing interim financial statements and accordingly, do not contain all the disclosures that may be necessary for complete financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”). The interim consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q. The interim consolidated financial statements should be read in conjunction with the Company’s 2011 Annual Report on Form 10-K. The interim consolidated financial statements follow the same accounting principles and methods of application as the most recent annual consolidated financial statements, except as noted in Note 2.

These interim unaudited consolidated financial statements reflect all adjustments which are, in the opinion of Management, necessary for a fair presentation of the results of the interim period presented. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2012.

2. New Accounting Pronouncements

FASB Accounting Standard Update (“ASU”) No. 2011-08, Testing Goodwill for Impairment, permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. FASB ASU No. 2011-08 was adopted by the Company on January 1, 2012.

FASB ASU No. 2011-05, Presentation of Comprehensive Income, requires entities to present net income and comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and comprehensive income. FASB has amended FASB ASU No. 2011-05 with FASB ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards No. 2011-05, which defers the effective date of certain requirements outlined in FASB ASU No. 2011-05 until further deliberated and reinstates the requirements for presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of FASB ASU No. 2011-05. FASB ASU No. 2011-05 was adopted by the Company on January 1, 2012.

FASB ASU No. 2011-04, Fair Value Measurement, provides guidance to improve the comparability of fair value measurements presented in financial statements prepared in accordance with GAAP and International Financial Reporting Standards. The new standard requires the Company to report the level in the fair value hierarchy of assets and liabilities not measured at fair value on the balance sheet, but for which the fair value is disclosed, and to expand existing disclosures. FASB ASU No. 2011-04 was adopted by the Company on January 1, 2012.

3. Foreign Currency Translation

A majority of the Company’s shareholders, customers and industry analysts are located in the United States. Accordingly, the Company has adopted the United States dollar as its reporting currency.

The United States dollar is the functional currency of the Company’s operations in the United States. The Canadian dollar is the functional currency of the Company’s Canadian operations. Each operation translates foreign currency denominated transactions into its functional currency using the rate of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated into the functional currency of the operation using the period-end rate of exchange giving rise to a gain or loss that is recognized in income during the current period.

8

The revaluation of United States dollar denominated debt held by the parent entity with a Canadian functional currency, that hedges the net investment in the Company’s United States dollar denominated self-sustaining subsidiaries, is recorded to other comprehensive income. In a hedge of a net investment in self-sustaining foreign subsidiaries, the portion of the gain or loss on the hedging item that is determined to be an effective hedge is recognized in other comprehensive income and the ineffective portion is recognized in earnings. For consolidation purposes, the United States operations are translated into Canadian dollars using the current period-end rate with the resulting translation adjustment recorded in other comprehensive income. For reporting purposes, the consolidated operations are translated into United States dollars using the current rate method. Under this method, all assets and liabilities are translated at the period-end rate of exchange and all revenue and expense items are translated at the average rate of exchange for the period. The resulting translation adjustment is recorded as a separate component of shareholders’ equity.

In respect of other transactions denominated in currencies other than the Canadian dollar, the monetary assets and liabilities of the Company are translated at the period-end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in income.

4. Computation of Loss per Share

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Numerator:
Net loss	$	(4,163	)	$	(2,297	)	$	(9,979	)	$	(2,521	)
Denominator:
Basic weighted-average shares outstanding		16,399,241			16,330,441			16,383,175			16,322,748
Dilutive weighted-average shares outstanding		16,399,241			16,330,441			16,383,175			16,322,748
Basic loss per share	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)
Diluted loss per share	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)

Due to the net loss for the three and six months ended June 30, 2012 and June 30, 2011, dilutive common share equivalents have no effect on the loss per share.

5. Assets Held for Sale

The Company has certain assets that are classified as assets held for sale. These assets are carried on the balance sheet at the lower of the carrying amount or estimated fair value, less cost to sell. Once an asset is classified held for sale, there is no further depreciation taken on the asset. At June 30, 2012, the net book value of assets held for sale was approximately $2.2 million (December 31, 2011—$3.5 million). This amount is included in property and equipment on the balance sheet.

6. Contingent Liabilities

The Company is subject to legal proceedings that arise in the ordinary course of business. In the opinion of Management, the aggregate liability, if any, with respect to these actions, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Legal costs are expensed as incurred.

7. Income Taxes

The Company established a valuation allowance for all U.S. deferred tax assets as required by FASB ASC 740-10. During the six months ended June 30, 2012, the Company increased the valuation allowance by $4.0 million (2011—$2.4 million) to $52.4 million.

9

8. Risk Management Activities and Fair Value Measurements

The Company is exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading purposes.

Interest Rate Swaps

The Company is exposed to interest rate volatility with regard to existing variable rate debt. The Company had entered into variable-to-fixed interest rate swaps on variable rate term debt and revolving debt to limit its exposure to changing interest rates and future cash flows for interest. The interest rate swaps provided for the Company to pay an amount equal to a specified fixed rate of interest times a notional principal amount and to receive in return an amount equal to a variable rate of interest times the same notional amount. The swaps were accounted for as cash flow hedges. The effective portions of changes in fair value of the interest rate swaps were recorded in accumulated other comprehensive income and were recognized into income in the same year in which the hedged forecasted transaction affects income. Ineffective portions of changes in fair value are recognized into income as they occur. At June 30, 2012, there were no interest rate swaps outstanding.

Hedges of net investment in self-sustaining operations

United States dollar denominated debt of $0.6 million held by an entity with a Canadian dollar functional currency is designated as a hedge against the Company’s exposure for a portion of its net investment in self-sustaining U.S. dollar denominated subsidiaries with a view to reducing the impact of foreign exchange fluctuations. The foreign exchange effect of both the U.S. dollar debt and the net investment in U.S. dollar denominated subsidiaries is reported in other comprehensive income. As at June 30, 2012, the Company’s net investment in U.S. dollar denominated subsidiaries totalled $229.1 million. No ineffectiveness has been recorded in earnings as the notional amounts of the hedging item equals the portion of the net investment balance being hedged.

Financial Instruments

The fair values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values because of the short-term nature of these financial instruments. The fair value of the Company’s long-term debt, determined based on the future cash flows associated with each debt instrument discounted using an estimate of the Company’s current borrowing rate for similar debt instruments of comparable maturity, is approximately equal to their carrying value at June 30, 2012 and December 31, 2011.

FASB ASC 820-10-05 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value of the Company’s cash and cash equivalents and long-term debt are classified as Level 1 and Level 2, respectively.

10

9. Segmented Information

The Company’s business operations are grouped into two operating segments: Less-than-truckload (LTL) and Supply Chain Operation (SCO), which provide transportation and supply chain services in Canada and the United States.

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Revenue:
LTL	$	183,789		$	178,362		$	362,376		$	337,351
SCO Corporate office and other		29,308 —			30,519 —			58,469 —			56,918 —
	$	213,097		$	208,881		$	420,845		$	394,269
	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Operating income (loss) from operations:
LTL	$	(3,307	)	$	(1,182	)	$	(8,142	)	$	(256	)
SCO		2,371			2,337			4,469			4,427
Corporate office and other		(1,248	)		(1,396	)		(2,679	)		(2,905	)
	$	(2,184	)	$	(241	)	$	(6,352	)	$	1,266
	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Depreciation and amortization:
LTL	$	3,742		$	3,630		$	7,476		$	7,579
SCO		318			368			634			734
Corporate office and other		24			42			49			84
	$	4,084		$	4,040		$	8,159		$	8,397

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Item 2. Management’s Discussion and Analysis of Results of Operation

The following discussion should be read in conjunction with our unaudited consolidated interim financial statements for the three and six months ended June 30, 2012 and the notes thereto as included in Item 1 of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws concerning Vitran’s business, operations, and financial performance and condition.

Forward-looking statements may be generally identifiable by use of the words “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, “may”, “plans”, “continue”, “will”, “focus”, “should”, “endeavor” or the negative of these words or other variation on these words or comparable terminology. These forward-looking statements are based on current expectations and are subject to uncertainty and changes in circumstances that may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

This Quarterly Report on Form 10-Q contains forward-looking statements regarding, but not limited to, the following:

• the Company’s expectation that efficiencies within the U.S. LTL business unit will reduce salaries, wages and employee benefits expense as a percentage of revenue;

• the Company’s expectation that revenue per hundredweight and length of haul will increase in upcoming quarters as the freight environment improves and the LTL segment continues to cross-sell the newly acquired territory;

• the Company’s expectation that it will be able to reduce maintenance expense in 2012;

• the Company’s expectation that operating initiatives implemented will continue to improve productivity and service levels within the U.S. LTL business unit;

• the Company’s expectation that fuel economy will continue to improve from the new tractors purchased and as a result fuel costs will decrease;

• the Company’s expectation that operational improvements within the U.S. LTL business unit will have a positive impact on financial results in 2012;

• the Company’s expectation that activity levels and pricing trends will improve year-over-year results;

• the Company’s ability to maintain DSO below 40 days;

• the Company’s intention to purchase a specified level of property and equipment and to finance such acquisitions with cash flow from operations and, if necessary, from the Company’s revolving credit facilities;

• the Company’s ability to generate future operating cash flows from profitability and managing working capital;

• the Company’s ability to continue to improve results in the SCO segment if trends in current activity levels within the segment improve;

• the Company’s expectation that the two new dedicated facilities within the SCO segment will positively impact earnings during the remainder of 2012;

• the Company’s operational plan will improve service and efficiencies in the U.S. LTL business unit; and

• the Company’s ability to benefit from an improvement in the economic and pricing environment.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Vitran’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that may cause such differences include but are not limited to technological change, increase in fuel costs, regulatory change, changes in tax legislation, the general health of the economy, changes in labor relations, geographic expansion, capital requirements, availability of financing, foreign currency fluctuations, claims and insurance costs, environmental hazards, availability of qualified drivers and competitive factors. More detailed information about these and other factors is included in Item 1A – Risk Factors in the Company’s 2011 Annual Report on Form 10-K. Many of these factors are beyond the Company’s control; therefore, future events may vary substantially from what the Company currently foresees. You should not place undue reliance on such forward-looking statements. Vitran Corporation Inc. does not assume the obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

Unless otherwise indicated all dollar references herein are in U.S. dollars. The Company’s Annual Report on Form 10-K, as well as all the Company’s other required filings, may be obtained from the Company at www.vitran.com or from www.sedar.com or from www.sec.gov.

12

CONSOLIDATED RESULTS

The following table summarizes the Consolidated Statements of Income (Loss) for the three and six months ended June 30:

	For the three months ended June 30,									For the six months ended June 30,
(in thousands)	2012			2011			2012 vs 2011			2012			2011			2012 vs 2011
Revenue	$	213,097		$	208,881			2.0	%	$	420,845		$	394,269			6.7	%
Salaries, wages and employee benefits		84,872			79,877			6.3	%		168,087			149,494			12.4	%
Purchased transportation		31,968			34,625			(7.7	%)		63,445			64,617			(1.8	%)
Depreciation and amortization		4,084			4,040			1.1	%		8,159			8,397			(2.8	%)
Maintenance		10,205			8,994			13.5	%		19,876			17,086			16.3	%
Rents and leases		11,768			9,175			28.3	%		23,018			17,256			33.4	%
Purchased labor and owner operators		18,671			20,259			(7.8	%)		36,656			38,584			(5.0	%)
Fuel and fuel related expenses		35,732			36,074			(0.9	%)		72,967			66,204			10.2	%
Other operating expenses		18,107			16,145			12.2	%		35,039			31,470			11.3	%
Other income		(126	)		(67	)		88.1	%		(50	)		(105	)		(52.4	%)
Total Expenses	$	215,281		$	209,122			2.9	%	$	427,197		$	393,003			8.7	%
Income (loss) from continuing operations		(2,184	)		(241	)		806.2	%		(6,352	)		1,266			(601.7	%)
Interest expense, net		1,330			1,311			1.4	%		2,641			2,653			(0.5	%)
Income tax expense		649			745			(12.9	%)		986			1,134			(13.1	%)
Net loss	$	(4,163	)	$	(2,297	)		81.2	%	$	(9,979	)	$	(2,521	)		295.8	%
Loss per share:
Basic	$	(0.25	)	$	(0.14	)				$	(0.61	)	$	(0.15	)
Diluted	$	(0.25	)	$	(0.14	)				$	(0.61	)	$	(0.15	)
Operating Ratio (1)		101.0	%		100.1	%					101.5	%		99.7	%

Revenue increased 2.0% to $213.1 million for the second quarter of 2012 compared to $208.9 million in the second quarter of 2011. Revenue in the LTL segment increased 3.0% compared to the second quarter of 2011. Revenue in the SCO segment decreased 4.0% compared to the second quarter of 2011. Revenue for the second quarter of 2012 was negatively impacted by a weaker Canadian dollar and was partially offset by an increase in fuel surcharge revenue, resulting in a reduction of $2.2 million in consolidated revenue. Excluding the impact of fuel surcharge revenue and a weaker Canadian dollar, revenue for the comparative quarters improved 3.1%. For the six-months ended June 30, 2012, revenue increased 6.7% to $420.8 million compared to $394.3 million for the six-month period ended June 30, 2011. Consolidated revenue for the comparable six-month period was also impacted by a weaker Canadian dollar and increase in fuel surcharge revenue accounting for $2.8 million of the total revenue increase. Detailed explanations for the fluctuations in revenue are discussed below in “Segmented Results”.

Salaries, wages and employee benefits increased 6.3% for the second quarter of 2012 compared to the same period a year ago. For the six-month period ended June 30, 2012, salaries, wages and employee benefits increased 12.4% compared to the same six-month period a year ago. This compares with a 9.9% increase in employee headcount compared to June 30, 2011. Headcount increased mid-way through the first quarter of 2011 resulting from the acquisition of the Milan Express Inc. (“Milan”) LTL assets on February 19, 2011. The full impact of the increase in headcount is included in the first six-months of 2012 whereas it was only partially included in the first six months a year ago. Furthermore, management returned to its U.S. LTL business unit employees the 2008 5% wage reduction at 1.25% per quarter by the end of 2011, therefore, the second quarter of 2012 includes the full 5% wage increase compared to a 2.5% wage increase in the second quarter of 2011. Salary, wages and employee benefit expenses should outpace the prior year expenses, but as management improves efficiencies within the U.S. LTL business unit, it is expected to decline on a percentage of revenue basis.

13

Purchased transportation decreased 7.7% and 1.8% for the three-month and six-month periods ended June 30, 2012 compared to the same periods in 2011, respectively. Purchased transportation decreased 21.8% in the U.S. LTL business unit in the second quarter of 2012 compared to the same quarter a year ago. The additional tractors in 2011 received by the U.S. LTL business unit along with a concerted effort to reduce purchased miles led to the decrease in purchased transportation. Offsetting the decrease is SCO’s brokerage business unit as shipments increased 8.2% in the first six-months of 2012 compared to the same period in 2011.

Depreciation and amortization expense increased 1.1% for the second quarter of 2012 compared to the same period in 2011, and is primarily attributable to the purchase of rolling stock and buildings in 2012. Depreciation and amortization expense decreased 2.8% for the six-month period ended June 30, 2012 compared to the same period in 2011, and is attributable to the sale of rolling stock and buildings throughout 2011.

Maintenance expense increased 13.5% and 16.3% for the three-month and six-month periods ended June 30, 2012 compared to the same periods in 2011, respectively. As a percentage of revenue, maintenance expense was consistent with the first quarter of 2012. The Company’s U.S. LTL business unit completed a review of its tractor fleet in the second quarter of 2012 that began in the first quarter and incurred additional repair costs. The U.S. LTL business unit received 200 additional tractors in the second quarter and it is management’s expectation that the Company will be able to reduce its maintenance costs as a percentage of revenue.

Rents and leases expense increased 28.3% and 33.4% for the three-month and six-month periods ended June 30, 2012 compared to the same periods in 2011. The increase is attributable to the 400 new tractors received in 2011, 150 new tractors received in 2012 and 700 new trailers received in 2012, which were all acquired by the U.S. LTL business unit. Rents and leases expense should continue to increase due to an additional 100 new trailers acquired by the U.S. LTL business unit to be delivered in the third quarter.

Purchased labor and owner operator expenses, primarily driven by the Canadian LTL business unit and the SCO segment, decreased in the comparable three-month and six-month periods ended June 30, 2012 due to a reduction in hours required and shifting some labor to full and part-time employees within the SCO segment.

Fuel and fuel-related expenses were flat for the three month period and increased 10.2% for the six-month period ended June 30, 2012 compared to the same period a year ago. The average price of diesel increased approximately 2.8% compared to the six-month period ended June 30, 2011. Furthermore, the Company’s fuel consumption increased due to the increase in activity as indicated by the 3.8% increase in shipments within the U.S. LTL business unit during the quarter. The Company should continue to receive improved fuel economy from the 600 new tractors acquired in 2011 and 2012.

The Company incurred interest expense of $1.3 million in the second quarter of 2012 compared to interest expense of $1.3 million for the same quarter a year ago. The Company’s total balance sheet debt net of cash at June 30, 2012 is $6.7 million greater than June 30, 2011. A majority of the increase relates to capital leases for rolling stock and equipment entered into near the end of the quarter. The average interest rate on the Company’s asset-based revolving credit agreement was slightly lower than the second quarter of 2011.

In accordance with Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“FASB ASC”) 740-10, the Company recorded a valuation allowance for all U.S. deferred tax assets. As required by this standard, the Company increased the valuation allowance by $4.0 million, which would have been the tax recovery attributable to the Company’s U.S. based companies for the six-months ended June 30, 2012. Consequently, the Company recorded a consolidated tax expense of $1.0 million for the first six-months of 2012 compared to a consolidated tax expense of $1.1 million for the first six-months of 2011.

Net loss for the 2012 second quarter was $4.2 million compared to net loss of $2.3 million for the same quarter in 2011. This resulted in a loss per share of $0.25 for the second quarter of 2012 compared to a loss per share of $0.14 for the second quarter of 2011. The weighted average number of shares for the current quarter was 16.4 million basic and diluted compared to 16.3 million basic and diluted shares in the second quarter of 2011. For the six months ended June 30, 2012, the Company posted a net loss of $10.0 million compared to a net loss of $2.5 million in the same six-month period a year ago. This resulted in a loss of $0.61 per share compared to a loss of $0.15 per share for the 2011 six-month period. The weighted average number of shares for the six-month period of 2012 was 16.4 million basic and diluted compared to 16.3 million shares basic and diluted in the six-month period of 2011.

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SEGMENTED RESULTS

Less-Than-Truckload (LTL)

The table below provides summary information for the LTL segment for the three and six months ended June 30:

	For the three months ended June 30,									For the six months ended June 30,
(in thousands)	2012			2011			2012 vs 2011			2012			2011			2012 vs 2011
Revenue	$	183,789		$	178,362			3.0	%	$	362,376		$	337,351			7.4	%
Loss from operations		(3,307	)		(1,182	)		179.8	%		(8,142	)		(256	)		3,080.5	%
Operating ratio		101.8	%		100.7	%					102.2	%		100.1	%
	For the three months ended June 30,									For the six months ended June 30,
(in thousands)	2012			2011			2012 vs 2011			2012			2011			2012 vs 2011
Number of shipments (2)		1,155,476			1,114,263			3.7	%		2,281,627			2,126,784			7.3	%
Weight (000s of lbs) (3)		1,707,367			1,684,381			1.4	%		3,360,058			3,210,920			4.6	%
Revenue per shipment (4)	$	159.06		$	160.07			(0.6	%)	$	158.82		$	158.62			0.1	%
Revenue per hundredweight (5)	$	10.76		$	10.59			1.6	%	$	10.78		$	10.51			2.7	%

Revenue in the LTL segment increased 3.0% to $183.8 million in the second quarter of 2012 compared to $178.4 million in the same period a year ago. Fuel surcharge had a minimal impact on revenue in the second quarter of 2012. Revenue net of fuel surcharge for the second quarter of 2012 increased 3.3% compared to the second quarter of 2011. Furthermore, shipments and tonnage increased 3.7% and 1.4% respectively compared to the second quarter of 2011.

Revenue in the LTL segment increased 7.4% to $362.4 million for the six-month period ended June 30, 2012 compared to $337.4 million for the same six-month period a year ago. Revenue was impacted by the additional business from the Milan acquisition on February 19, 2011, which had a full impact in the first six-months of 2012 compared to only a partial impact in the first six-months of 2011. Shipments and tonnage increased 7.3% and 4.6%, respectively, in the comparable six-month period.

Shipments per day in the U.S. LTL business unit increased 3.8% for the second quarter of 2012 compared to the second quarter of 2011. This is attributable to density growth and the Company’s continued success in the 5 new states acquired as part of the Milan acquisition in February 2011. On a year-over-year basis from June 2012 compared to June 2011, length of haul increased 1.3% and revenue per hundredweight increased 4.2%. Management expects the revenue per hundredweight to increase in the upcoming quarters as the pricing environment continues to favor LTL carriers and the LTL segment continues to sell into the expanded territory.

The U.S. LTL business unit did not meet management’s expectation in the second quarter of 2012. During the first quarter the business unit added key personnel to important positions within the organization. It has taken some time for the new leadership to evaluate operations, evaluate personnel and begin to implement positive changes to all aspects of the business to improve operating results. Achievements have been made in improving the customer experience at the Company including the introduction of tablet technology to the pick-up and delivery team and an improved dispatch interface. Labor costs were comparatively higher in the quarter as additional costs for training were incurred during the implementation of the tablet technology. The new management team’s focus continues to be on improving service, sales and operating efficiency and it is management’s expectation these initiatives will have a positive impact on financial results during the remainder of 2012.

The Canadian LTL business unit posted a solid 2012 second quarter benefiting from a steady Canadian economy and a stable operation compared to the U.S. LTL business unit.

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Lastly, management believes that with additional density gains, continued momentum in the North American pricing environment, combined with a continued focus on operational and personnel improvements, the LTL segment is well positioned to improve income from operations over the long term.

Supply Chain Operation (SCO)

The table below provides summary information for the Supply Chain Operation segment for the three and six months ended June 30:

	For the three months ended June 30,									For the six months ended June 30,
(in thousands)	2012			2011			2012 vs 2011			2012			2011			2012 vs 2011
Revenue	$	29,308		$	30,519			(4.0	%)	$	58,469		$	56,918			2.7	%
Income from operations		2,371			2,337			1.5	%		4,469			4,427			0.9	%
Operating ratio		91.9	%		92.3	%					92.4	%		92.2	%

Revenue in the SCO segment decreased 4.0% for the second quarter of 2012 compared to the second quarter 2011. Revenue for the second quarter was impacted by a weaker Canadian dollar and from long-term contract renewals. However, income from operations increased 1.5% in the second quarter of 2012 compared to the same quarter in 2011, and the SCO segment posted an operating ratio of 91.9 % in the second quarter of 2012 compared to 92.3% in the second quarter of 2011. Management opened a new dedicated facility in Tacoma, Washington during the second quarter of 2012 and opened a dedicated facility in Kansas City, Kansas in July 2012. Both dedicated facilities are expected to begin fully contributing in the third quarter. Operating results in the upcoming quarters should see continued improvement, as the aforementioned two new facilities begin fully contributing in the third quarter and activity levels improve throughout the second half of the year.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from continuing operations for the second quarter of 2012 generated $3.7 million compared to $4.1 million in the 2011 second quarter. The Company generated a net loss from operations in the second quarter of 2012; however, this was offset by the improvement in non-cash working capital. Days sales outstanding (“DSO”) in the second quarter of 2012 were 38.2 days compared to DSO of 39.0 days for the second quarter of 2011.

The Company’s future operating cash flows are largely dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable, and wage and benefit accruals.

As at June 30, 2012, interest-bearing debt was $88.0 million consisting of $32.9 million drawn under the syndicated asset-based revolving credit facility, $44.4 million of real estate term debt, $3.3 million of term debt, and $7.4 million of capital leases. At December 31, 2011, interest-bearing debt was $73.9 million consisting of $21.9 million drawn under the syndicated asset-based revolving credit facility, $45.0 million of real estate term debt, $3.5 million of term debt, and $3.5 million of capital leases.

For the six months ended June 30, 2012, the Company repaid $0.4 million of real estate term debt, $0.3 million of term debt, $1.8 million of capital leases, and drew down $11.0 million under its revolving credit facilities. At June 30, 2012, the Company had $30.6 million of available credit facilities, net of outstanding letters of credit, to achieve its future operational and capital objectives. The Company was in compliance with all terms under its credit agreements at June 30, 2012.

The Company generated $1.6 million in proceeds on the divestiture of facilities in Springfield, MO, Louisville, KY, Toledo, OH and surplus equipment in the first six months of 2012. Capital expenditures amounted to $13.3 million for the first six months of 2012 and were funded out of the revolving credit facilities and capital leases. The majority of the capital expenditures were for a facility in Memphis, TN, construction of the Winnipeg, MB facility, rolling stock and dock equipment.

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The table below sets forth the Company’s capital expenditures for the three and six months ended June 30:

	For the three months ended June 30,				For the six months ended June 30,
(in thousands of dollars)	2012		2011		2012		2011
Real estate and buildings	$	3,675	$	3,217	$	4,355	$	4,620
Tractors		4,363		331		4,498		763
Trailing fleet		—		494		1,906		621
Information technology		541		158		657		321
Leasehold improvements		70		6		194		64
Other equipment		1,211		62		1,678		219
Total	$	9,860	$	4,268	$	13,288	$	6,608

Management estimates that cash capital expenditures for the remainder of 2012 will be between $5.0 million and $10.0 million. The Company may enter into operating leases to fund the acquisition of specific equipment should the business levels exceed the current equipment capacity of the Company. The Company expects to finance its capital requirements with cash flow from operations, operating leases and, if required, its $30.6 million of unused credit facilities.

The Company has contractual obligations that include long-term debt consisting of term debt facilities, revolving credit facilities, capital leases for operating equipment and off-balance-sheet operating leases primarily consisting of tractor, trailing fleet and real estate leases. Operating leases form an integral part of the Company’s financial structure and operating methodology as they provide an alternative cost-effective and flexible form of financing.

The following table summarizes our significant contractual obligations and commercial commitments as of June 30, 2012:

(in thousands of dollars)			Payments due by period
Contractual Obligations	Total		2012		2013 & 2014		2015 & 2016		Thereafter
Term credit facilities	$	3,250	$	2,000	$	1,250	$	Nil	$	Nil
Real estate facility		44,437		486		2,074		2,272		39,605
Revolving credit facilities		32,890		Nil		32,890		Nil		Nil
Capital lease obligations		7,448		1,180		2,672		2,642		954
Estimated interest payments (1)		16,000		1,769		6,415		4,145		3,671
Sub-total		104,025		5,435		45,301		9,059		44,230
Off-balance sheet commitments
Operating leases		124,845		20,001		62,481		33,012		9,351
Purchase obligations (2)		2,417		2,417		Nil		Nil		Nil
Total Contractual Obligations	$	231,287	$	27,853	$	107,782	$	42,071	$	53,581

⁽¹⁾  The Company has estimated its interest obligation on its fixed and variable rate obligations. For fixed rate debt, the fixed interest rate was used to determine the interest obligation. For variable rate debt, the variable interest rate in place at June 30, 2012 was used to determine the total interest obligation.

⁽²⁾  The Company has a contractual obligation for approximately $2.4 million for the purchase of trailers in 2012. The Company has commitments to finance the purchase with an operating lease.

In addition to the above-noted contractual obligations, as at June 30, 2012, the Company utilized the revolving credit facility for standby letters of credit of $20.5 million. The letters of credit are used as collateral for self-insured retention of insurance claims. Export Development Canada (“EDC”), a Crown corporation wholly owned by the government of Canada, provides guarantees up to $12.2 million on LOC’s to the Company’s syndicated lenders. In so doing, the Company’s definition of available debt in the associated revolving credit agreement excludes LOC’s guaranteed by the EDC.

A significant decrease in demand for our services could limit the Company’s ability to generate cash flow and affect its profitability. The Company’s asset-based revolving credit agreement is subject to financial maintenance tests that trigger when certain events occur, that will require the Company to achieve stated levels of financial performance, which, if not achieved, could cause an acceleration of the payment schedules. Should the current macro-economic environment further destabilize, and if triggered, the Company may fail to comply with the aforementioned debt covenants within the next twelve months. Assuming no significant decline in business levels or financial performance, management expects that existing working capital, together with available revolving credit facilities, will be sufficient to fund operating and capital requirements as well as service the contractual obligations.

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OUTLOOK

The SCO segment should continue to improve operating results through the balance of the year as the aforementioned two new dedicated facilities fully contribute in the second half of 2012. The most significant opportunity remains in the U.S. LTL business unit and management’s continued focus is to improve the contribution to operating results of this business unit. The new management team has a plan in place to improve service, productivity and efficiency of the operation. Executing on this plan will allow management to expand revenue through increased pricing and density.

Management is optimistic, should the U.S. LTL business unit successfully execute its operational plan, activity levels and pricing initiatives continue to improve, that the Company is positioned to improve operating results during the remainder of 2012.

QUARTERLY RESULTS (unaudited)

(thousands of dollars except per share amounts)	2012 Q2			2012 Q1			2011 Q4			2011 Q3			2011 Q2			2011 Q1			2010 Q4 *			2010 Q3
Revenue	$	213,097		$	207,748		$	205,170		$	206,159		$	208,881		$	185,388		$	171,576		$	174,124
Income (loss) from continuing operations		(2,184	)		(4,168	)		(4,848	)		(739	)		(241	)		1,507			(2,735	)		4,069
Net Income (loss) from continuing operations		(4,163	)		(5,816	)		(8,072	)		(3,420	)		(2,297	)		(224	)		(40,208	)		1,868
Income (loss) from continuing operations per share:
Basic	$	(0.25	)	$	(0.36	)	$	(0.49	)	$	(0.21	)	$	(0.14	)	$	(0.01	)	$	(2.47	)	$	0.11
Diluted		(0.25	)		(0.36	)		(0.49	)		(0.21	)		(0.14	)		(0.01	)		(2.47	)		0.11
Weighted average number of shares:
Basic		16,399,241			16,367,109			16,331,241			16,330,171			16,330,041			16,315,374			16,299,643			16,277,202
Diluted		16,399,241			16,367,109			16,331,241			16,330,171			16,330,041			16,315,374			16,299,643			16,359,468

* In the fourth quarter of 2010, Vitran recorded a non-cash tax valuation allowance of $38.9 million negatively impacting net income (loss) from continuing operations.

Definitions of non-GAAP measures:

(1) Operating ratio (“OR”) is a non-GAAP financial measure which does not have any standardized meaning prescribed by GAAP. OR is the sum of total operating expenses, divided by revenue. OR allows management to measure the Company and its various segments’ operating efficiency. OR is a widely recognized measure in the transportation industry which provides a comparable benchmark for evaluating the Company’s performance compared to its competitors. Investors should also note that the Company’s presentation of OR may not be comparable to similarly titled measures by other companies. OR is calculated as follows:

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Total operating expenses	$	215,281		$	209,122		$	427,197		$	393,003
Revenue		213,097			208,881			420,845			394,269
Operating ratio (“OR”)		101.0	%		100.1	%		101.5	%		99.7	%

(2) A shipment is a single movement of goods from a point of origin to its final destination as described on a bill of lading document.

(3) Weight represents the total pounds shipped.

(4) Revenue per shipment represents revenue divided by the number of shipments.

(5) Revenue per hundredweight is the price obtained for transporting 100 pounds of LTL freight from point to point, calculated by dividing the revenue for an LTL shipment by the hundredweight (weight in pounds divided by 100) for a shipment.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to the impact of interest rate changes. The Company’s exposure to changes in interest rates is limited to borrowings under the term bank facilities and revolving credit facilities that have variable interest rates tied to the LIBOR rate. We estimate that the fair value of the long-term debt approximates the carrying value.

(in thousands of dollars)				Payments due by period
Long-Term Debt	Total			2012			2013 & 2014			2015 & 2016			Thereafter
Variable Rate
Term bank facility	$	3,250		$	2,000		$	1,250		$	Nil		$	Nil
Average interest rate (LIBOR)		3.97	%		3.97	%		3.97	%
Revolving bank facility		32,890			Nil			32,890			Nil			Nil
Average interest rate (LIBOR)		2.75	%					2.75	%
Fixed Rate
Real Estate facility		44,437			486			2,074			2,272			39,605
Interest Rate		4.75	%		4.75	%		4.75	%		4.75	%		4.75	%
Capital lease obligations		7,448			1,180			2,672			2,642			954
Average interest rate		6.15	%		6.15	%		6.15	%		6.15	%		6.15	%
Total	$	88,025		$	3,666		$	38,886		$	4,914		$	40,559

The Company is exposed to foreign currency risk as fluctuations in the United States dollar against the Canadian dollar can impact the financial results of the Company. The Company’s Canadian operations realize foreign currency exchange gains and losses on the United States dollar denominated revenue generated against Canadian dollar denominated expenses. Furthermore, the Company reports its results in United States dollars thereby exposing the results of the Company’s Canadian operations to foreign currency fluctuations. In addition, the Company’s United States dollar debt of $0.6 million is designated as a hedge of the investment in self-sustaining foreign operations in the United States.

Item 4. Controls and Procedures

Disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act, are controls and other procedures that are designed to ensure that information required to be disclosed by our Company is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our Company’s management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Our CEO and CFO are responsible for establishing and maintaining disclosure controls and procedures for our Company.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of Company management, including our CEO and CFO, of the effectiveness of the design, implementation and operation of its disclosure controls and procedures. Based on this evaluation, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2012.

There have been no significant changes in our internal control over financial reporting, which we define in accordance with Exchange Act Rule 13a-15(f) to include our control environment, control procedures, and accounting systems, or any other factors that could materially affect or are reasonably likely to materially affect our internal control over financial reporting during the second quarter of 2012.

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Part II. Other Information

Item 1. Legal Proceedings

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of its business that have not been fully adjudicated. Many of these are covered in whole or in part by insurance. The Management of Vitran does not believe that these actions, when finally concluded and determined, will have a significant adverse effect upon Vitran’s financial condition, results of operations or cash flows.

Item 1A. Risk Factors

See Part 1A of the Company’s 2011 Annual Report on Form 10-K.

Item 2. Unregistered Sale of Equity and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits and Reports on Form 8-K

Exhibits

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 25, 2012
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 25, 2012
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 25, 2012

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VITRAN CORPORATION INC.
	/s/ FAYAZ D. SULEMAN
Date: July 25, 2012	Fayaz D. Suleman
	Vice President of Finance and Chief Financial Officer (Principle Financial Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Richard E. Gaetz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vitran Corporation Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 25, 2012

        /s/ RICHARD E. GAETZ        

Richard E. Gaetz

President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Fayaz D. Suleman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vitran Corporation Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 25, 2012

        /s/ FAYAZ D. SULEMAN        

Fayaz D. Suleman

Vice President, Finance and

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Each of the undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Vitran Corporation Inc., that, to his knowledge, the Quarterly Report of Vitran Corporation Inc. on Form 10-Q for the six months ended June 30, 2012, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of Vitran Corporation Inc.

Date: July 25, 2012	By:         /s/ RICHARD E. GAETZ
	Richard E. Gaetz
	President and Chief Executive Officer
	By:          /s/ FAYAZ D. SULEMAN
	Fayaz D. Suleman
	Vice President Finance and Chief Financial Officer

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Risk Management Activities and Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Risk Management Activities and Fair Value Measurements (Textual) [Abstract]
Interest rate swaps outstanding	$ 0
Debt designated as hedge	0.6
Net investment in subsidiaries on foreign denominations	229.1
Ineffectiveness recorded in earnings	$ 0

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Accounting Policies

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Accounting Policies

1. Accounting Policies

The interim consolidated financial statements have been prepared in accordance with the rules prescribed for filing interim financial statements and accordingly, do not contain all the disclosures that may be necessary for complete financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”). The interim consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q. The interim consolidated financial statements should be read in conjunction with the Company’s 2011 Annual Report on Form 10-K. The interim consolidated financial statements follow the same accounting principles and methods of application as the most recent annual consolidated financial statements, except as noted in Note 2.

These interim unaudited consolidated financial statements reflect all adjustments which are, in the opinion of Management, necessary for a fair presentation of the results of the interim period presented. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2012.

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Operations:
Net loss	$ (4,163)	$ (2,297)	$ (9,979)	$ (2,521)
Items not involving cash from operations:
Depreciation and amortization	4,084	4,040	8,159	8,397
Deferred income taxes	17	64	(8)	59
Share-based compensation expense	100	119	227	261
Gain on sale of property and equipment	(126)	(67)	(50)	(105)
Change in non-cash working capital components	3,817	2,270	(797)	(3,704)
Continuing operations	3,729	4,129	(2,448)	2,387
Discontinued operations	(30)	(1,342)	(61)	(526)
Net cash provided by (used in) operating activities	3,699	2,787	(2,509)	1,861
Investments:
Purchases of property and equipment	(5,761)	(4,268)	(7,543)	(6,608)
Proceeds on sale of property and equipment	1,026	265	1,567	329
Acquisition of business assets				(1,737)
Net cash provided by (used in) investing activities	(4,735)	(4,003)	(5,976)	(8,016)
Financing:
Change in revolving credit facility and bank overdraft	1,440	5,438	10,980	14,615
Repayment of long-term debt	(489)	(3,000)	(733)	(6,000)
Repayment of capital leases	(846)	(939)	(1,787)	(1,910)
Issue of common shares upon exercise of employee stock options			151	80
Net cash provided by (used in) financing activities	105	1,499	8,611	6,785
Effect of foreign exchange translation on cash	65	(283)	(19)	(630)
Increase (decrease) in cash and cash equivalents	(866)		107
Cash and cash equivalents, beginning of period	2,177		1,204
Cash and cash equivalents, end of period	1,311		1,311
Change in non-cash working capital components:
Accounts receivable	649	(5,057)	(7,230)	(21,872)
Inventory, deposits and prepaid expenses	1,706	1,791	258	(100)
Income and other taxes payable	493	659	(604)	365
Accounts payable and accrued liabilities	969	4,877	6,779	17,903
Change in non-cash working capital components	3,817	2,270	(797)	(3,704)
Supplemental disclosure of non-cash transactions:
Capital lease additions	$ 4,099		$ 5,745

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Consolidated Statements of Income (Loss) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Income (Loss) [Abstract]
Revenue	$ 213,097	$ 208,881	$ 420,845	$ 394,269
Operating expenses:
Salaries, wages and other employee benefits	84,872	79,877	168,087	149,494
Purchased transportation	31,968	34,625	63,445	64,617
Depreciation and amortization	4,084	4,040	8,159	8,397
Maintenance	10,205	8,994	19,876	17,086
Rents and leases	11,768	9,175	23,018	17,256
Purchased labor and owner operators	18,671	20,259	36,656	38,584
Fuel and fuel-related expenses	35,732	36,074	72,967	66,204
Other operating expenses	18,107	16,145	35,039	31,470
Other income	(126)	(67)	(50)	(105)
Total operating expenses	215,281	209,122	427,197	393,003
Income (loss) from operations before undernoted	(2,184)	(241)	(6,352)	1,266
Interest expense, net	1,330	1,311	2,641	2,653
Loss from operations before income taxes	(3,514)	(1,552)	(8,993)	(1,387)
Income tax expense	649	745	986	1,134
Net loss	$ (4,163)	$ (2,297)	$ (9,979)	$ (2,521)
Loss per share:
Basic and Diluted	$ (0.25)	$ (0.14)	$ (0.61)	$ (0.15)
Weighted average number of shares:
Basic	16,399,241	16,330,041	16,383,175	16,322,748
Diluted	16,399,241	16,330,041	16,383,175	16,322,748

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Common shares, no par value
Common shares, issued	16,399,241	16,331,241
Common shares, outstanding	16,399,241	16,331,241

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Computation of Loss per Share (Details Textual) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Computation of Loss Per Share (Textual) [Abstract]
Effect of dilutive common share equivalents on loss	$ 0	$ 0

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Income Taxes (Textual) [Abstract]
Valuation allowance for U.S. deferred tax assets	$ 52.4
Increase in valuation allowance for U.S. deferred tax assets	$ 4.0	$ 2.4

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Consolidated Statements of Shareholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Total	Common shares	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income
Beginning balance, Value at Dec. 31, 2010	$ 98,847	$ 99,658	$ 4,838	$ (10,901)	$ 5,252
Beginning balance, Shares at Dec. 31, 2010		16,300,041
Shares issued upon exercise of employee stock options	80	85	(5)
Shares issued upon exercise of employee stock options, Shares		30,000
Net loss	(2,521)			(2,521)
Other comprehensive income	1,248				1,248
Share-based compensation	261		261
Ending balance, Value at Jun. 30, 2011	97,915	99,743	5,094	(13,422)	6,500
Ending balance, Shares at Jun. 30, 2011		16,330,041
Beginning balance, Value at Dec. 31, 2011	84,973	99,746	5,334	(24,914)	4,807
Beginning balance, Shares at Dec. 31, 2011		16,331,241
Shares issued upon exercise of employee stock options	151	208	(57)
Shares issued upon exercise of employee stock options, Shares		68,000
Net loss	(9,979)			(9,979)
Other comprehensive income	(47)				(47)
Share-based compensation	227		227
Ending balance, Value at Jun. 30, 2012	$ 75,325	$ 99,954	$ 5,504	$ (34,893)	$ 4,760
Ending balance, Shares at Jun. 30, 2012		16,399,241

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net loss	$ (4,163)	$ (2,297)	$ (9,979)	$ (2,521)
Other comprehensive income(loss):
Change in foreign currency translation adjustment (net of income tax expense (recovery) of $1 and $(5) for the three and six months ended June 30, 2012; 2011 - $37 and $254)	(112)	119	(47)	1,007
Change in unrealized fair value derivatives designated as cash flow hedges (net of income taxes of $42 and $94 for the three months and six months ended June 30, 2011)		109		241
Other comprehensive income (loss)	(112)	228	(47)	1,248
Comprehensive loss	$ (4,275)	$ (2,069)	$ (10,026)	$ (1,273)

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Segmented Information

6 Months Ended

Jun. 30, 2012

Segmented Information [Abstract]

Segmented Information

9. Segmented Information

The Company’s business operations are grouped into two operating segments: Less-than-truckload (LTL) and Supply Chain Operation (SCO), which provide transportation and supply chain services in Canada and the United States.

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Revenue:
LTL	$	183,789		$	178,362		$	362,376		$	337,351
SCO Corporate office and other		29,308 —			30,519 —			58,469 —			56,918 —
	$	213,097		$	208,881		$	420,845		$	394,269
	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Operating income (loss) from operations:
LTL	$	(3,307	)	$	(1,182	)	$	(8,142	)	$	(256	)
SCO		2,371			2,337			4,469			4,427
Corporate office and other		(1,248	)		(1,396	)		(2,679	)		(2,905	)
	$	(2,184	)	$	(241	)	$	(6,352	)	$	1,266
	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Depreciation and amortization:
LTL	$	3,742		$	3,630		$	7,476		$	7,579
SCO		318			368			634			734
Corporate office and other		24			42			49			84
	$	4,084		$	4,040		$	8,159		$	8,397

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 18, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	VITRAN CORP INC
Entity Central Index Key	0000946823
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Document Period End Date	Jun. 30, 2012
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		16,399,241

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New Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2012

New Accounting Pronouncements [Abstract]

Testing Goodwill for Impairment

FASB Accounting Standard Update (“ASU”) No. 2011-08, Testing Goodwill for Impairment, permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. FASB ASU No. 2011-08 was adopted by the Company on January 1, 2012.

Presentation of Comprehensive Income

FASB ASU No. 2011-05, Presentation of Comprehensive Income, requires entities to present net income and comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and comprehensive income. FASB has amended FASB ASU No. 2011-05 with FASB ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards No. 2011-05, which defers the effective date of certain requirements outlined in FASB ASU No. 2011-05 until further deliberated and reinstates the requirements for presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of FASB ASU No. 2011-05. FASB ASU No. 2011-05 was adopted by the Company on January 1, 2012.

Fair Value Measurement

FASB ASU No. 2011-04, Fair Value Measurement, provides guidance to improve the comparability of fair value measurements presented in financial statements prepared in accordance with GAAP and International Financial Reporting Standards. The new standard requires the Company to report the level in the fair value hierarchy of assets and liabilities not measured at fair value on the balance sheet, but for which the fair value is disclosed, and to expand existing disclosures. FASB ASU No. 2011-04 was adopted by the Company on January 1, 2012.

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Change in foreign currency translation adjustment , income taxes	$ 1	$ 37	$ (5)	$ 254
Change in unrealized fair value derivatives designated as cash flow hedges, income taxes		$ 42		$ 94

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Computation of Loss per Share

6 Months Ended

Jun. 30, 2012

Computation of Loss per Share [Abstract]

Computation of Loss per Share

4. Computation of Loss per Share

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Numerator:
Net loss	$	(4,163	)	$	(2,297	)	$	(9,979	)	$	(2,521	)
Denominator:
Basic weighted-average shares outstanding		16,399,241			16,330,441			16,383,175			16,322,748
Dilutive weighted-average shares outstanding		16,399,241			16,330,441			16,383,175			16,322,748
Basic loss per share	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)
Diluted loss per share	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)

Due to the net loss for the three and six months ended June 30, 2012 and June 30, 2011, dilutive common share equivalents have no effect on the loss per share.

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Foreign Currency Translation

6 Months Ended

Jun. 30, 2012

Foreign Currency Translation [Abstract]

Foreign Currency Translation

3. Foreign Currency Translation

A majority of the Company’s shareholders, customers and industry analysts are located in the United States. Accordingly, the Company has adopted the United States dollar as its reporting currency.

The United States dollar is the functional currency of the Company’s operations in the United States. The Canadian dollar is the functional currency of the Company’s Canadian operations. Each operation translates foreign currency denominated transactions into its functional currency using the rate of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated into the functional currency of the operation using the period-end rate of exchange giving rise to a gain or loss that is recognized in income during the current period.

The revaluation of United States dollar denominated debt held by the parent entity with a Canadian functional currency, that hedges the net investment in the Company’s United States dollar denominated self-sustaining subsidiaries, is recorded to other comprehensive income. In a hedge of a net investment in self-sustaining foreign subsidiaries, the portion of the gain or loss on the hedging item that is determined to be an effective hedge is recognized in other comprehensive income and the ineffective portion is recognized in earnings. For consolidation purposes, the United States operations are translated into Canadian dollars using the current period-end rate with the resulting translation adjustment recorded in other comprehensive income. For reporting purposes, the consolidated operations are translated into United States dollars using the current rate method. Under this method, all assets and liabilities are translated at the period-end rate of exchange and all revenue and expense items are translated at the average rate of exchange for the period. The resulting translation adjustment is recorded as a separate component of shareholders’ equity.

In respect of other transactions denominated in currencies other than the Canadian dollar, the monetary assets and liabilities of the Company are translated at the period-end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in income.

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Assets Held for Sale (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Assets Held for Sale (Textual) [Abstract]
Net book value of assets held for sale	$ 2.2	$ 3.5

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Computation of Loss per Share (Tables)

6 Months Ended

Jun. 30, 2012

Computation of Loss per Share [Abstract]

Computation of Loss per Share

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Numerator:
Net loss	$	(4,163	)	$	(2,297	)	$	(9,979	)	$	(2,521	)
Denominator:
Basic weighted-average shares outstanding		16,399,241			16,330,441			16,383,175			16,322,748
Dilutive weighted-average shares outstanding		16,399,241			16,330,441			16,383,175			16,322,748
Basic loss per share	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)
Diluted loss per share	$	(0.25	)	$	(0.14	)	$	(0.61	)	$	(0.15	)

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

The Company established a valuation allowance for all U.S. deferred tax assets as required by FASB ASC 740-10. During the six months ended June 30, 2012, the Company increased the valuation allowance by $4.0 million (2011—$2.4 million) to $52.4 million.

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Assets Held for Sale

6 Months Ended

Jun. 30, 2012

Assets Held for Sale [Abstract]

Assets Held for Sale

5. Assets Held for Sale

The Company has certain assets that are classified as assets held for sale. These assets are carried on the balance sheet at the lower of the carrying amount or estimated fair value, less cost to sell. Once an asset is classified held for sale, there is no further depreciation taken on the asset. At June 30, 2012, the net book value of assets held for sale was approximately $2.2 million (December 31, 2011—$3.5 million). This amount is included in property and equipment on the balance sheet.

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Contingent Liabilities

6 Months Ended

Jun. 30, 2012

Contingent Liabilities [Abstract]

Contingent Liabilities

6. Contingent Liabilities

The Company is subject to legal proceedings that arise in the ordinary course of business. In the opinion of Management, the aggregate liability, if any, with respect to these actions, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Legal costs are expensed as incurred.

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Risk Management Activities and Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Risk Management Activities and Fair Value Measurements [Abstract]

Risk Management Activities and Fair Value Measurements

8. Risk Management Activities and Fair Value Measurements

The Company is exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading purposes.

Interest Rate Swaps

The Company is exposed to interest rate volatility with regard to existing variable rate debt. The Company had entered into variable-to-fixed interest rate swaps on variable rate term debt and revolving debt to limit its exposure to changing interest rates and future cash flows for interest. The interest rate swaps provided for the Company to pay an amount equal to a specified fixed rate of interest times a notional principal amount and to receive in return an amount equal to a variable rate of interest times the same notional amount. The swaps were accounted for as cash flow hedges. The effective portions of changes in fair value of the interest rate swaps were recorded in accumulated other comprehensive income and were recognized into income in the same year in which the hedged forecasted transaction affects income. Ineffective portions of changes in fair value are recognized into income as they occur. At June 30, 2012, there were no interest rate swaps outstanding.

Hedges of net investment in self-sustaining operations

United States dollar denominated debt of $0.6 million held by an entity with a Canadian dollar functional currency is designated as a hedge against the Company’s exposure for a portion of its net investment in self-sustaining U.S. dollar denominated subsidiaries with a view to reducing the impact of foreign exchange fluctuations. The foreign exchange effect of both the U.S. dollar debt and the net investment in U.S. dollar denominated subsidiaries is reported in other comprehensive income. As at June 30, 2012, the Company’s net investment in U.S. dollar denominated subsidiaries totalled $229.1 million. No ineffectiveness has been recorded in earnings as the notional amounts of the hedging item equals the portion of the net investment balance being hedged.

Financial Instruments

The fair values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values because of the short-term nature of these financial instruments. The fair value of the Company’s long-term debt, determined based on the future cash flows associated with each debt instrument discounted using an estimate of the Company’s current borrowing rate for similar debt instruments of comparable maturity, is approximately equal to their carrying value at June 30, 2012 and December 31, 2011.

FASB ASC 820-10-05 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value of the Company’s cash and cash equivalents and long-term debt are classified as Level 1 and Level 2, respectively.

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Computation of Loss per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Numerator:
Net loss	$ (4,163)	$ (2,297)	$ (9,979)	$ (2,521)
Denominator:
Basic weighted-average shares outstanding	16,399,241	16,330,041	16,383,175	16,322,748
Dilutive weighted-average shares outstanding	16,399,241	16,330,041	16,383,175	16,322,748
Basic loss per share	$ (0.25)	$ (0.14)	$ (0.61)	$ (0.15)
Diluted loss per share	$ (0.25)	$ (0.14)	$ (0.61)	$ (0.15)

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Segmented Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segmented Information
Revenue	$ 213,097	$ 208,881	$ 420,845	$ 394,269
Operating income (loss) from operations	(2,184)	(241)	(6,352)	1,266
Depreciation and amortization	4,084	4,040	8,159	8,397
LTL [Member]
Segmented Information
Revenue	183,789	178,362	362,376	337,351
Operating income (loss) from operations	(3,307)	(1,182)	(8,142)	(256)
Depreciation and amortization	3,742	3,630	7,476	7,579
SCO [Member]
Segmented Information
Revenue	29,308	30,519	58,469	56,918
Operating income (loss) from operations	2,371	2,337	4,469	4,427
Depreciation and amortization	318	368	634	734
Corporate office and other [Member]
Segmented Information
Revenue
Operating income (loss) from operations	(1,248)	(1,396)	(2,679)	(2,905)
Depreciation and amortization	$ 24	$ 42	$ 49	$ 84

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 1,311	$ 1,204
Accounts receivable	90,709	83,479
Inventory, deposits and prepaid expenses	11,614	11,872
Deferred income taxes	172	175
Total current assets	103,806	96,730
Property and equipment	129,967	125,219
Intangible assets	4,575	5,805
Goodwill	14,307	14,314
Total assets	252,655	242,068
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities	87,597	80,818
Income and other taxes payable	662	1,266
Current liabilities of discontinued operations		61
Current portion of long-term debt	6,225	6,817
Total current liabilities	94,484	88,962
Long-term debt	81,799	67,072
Deferred income taxes	1,047	1,061
Shareholders' equity:
Common shares, no par value, unlimited authorized, 16,399,241 and 16,331,241 issued and outstanding at June 30, 2012 and December 31, 2011, respectively	99,954	99,746
Additional paid-in capital	5,504	5,334
Accumulated deficit	(34,893)	(24,914)
Accumulated other comprehensive income	4,760	4,807
Total shareholders' equity	75,325	84,973
Contingent liabilities (note 6)
Total liabilities and shareholders' equity	$ 252,655	$ 242,068

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New Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

2. New Accounting Pronouncements

FASB Accounting Standard Update (“ASU”) No. 2011-08, Testing Goodwill for Impairment, permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. FASB ASU No. 2011-08 was adopted by the Company on January 1, 2012.

FASB ASU No. 2011-05, Presentation of Comprehensive Income, requires entities to present net income and comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and comprehensive income. FASB has amended FASB ASU No. 2011-05 with FASB ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards No. 2011-05, which defers the effective date of certain requirements outlined in FASB ASU No. 2011-05 until further deliberated and reinstates the requirements for presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of FASB ASU No. 2011-05. FASB ASU No. 2011-05 was adopted by the Company on January 1, 2012.

FASB ASU No. 2011-04, Fair Value Measurement, provides guidance to improve the comparability of fair value measurements presented in financial statements prepared in accordance with GAAP and International Financial Reporting Standards. The new standard requires the Company to report the level in the fair value hierarchy of assets and liabilities not measured at fair value on the balance sheet, but for which the fair value is disclosed, and to expand existing disclosures. FASB ASU No. 2011-04 was adopted by the Company on January 1, 2012.

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Segmented Information (Tables)

6 Months Ended

Jun. 30, 2012

Segmented Information [Abstract]

Segmented Information

	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Revenue:
LTL	$	183,789		$	178,362		$	362,376		$	337,351
SCO Corporate office and other		29,308 —			30,519 —			58,469 —			56,918 —
	$	213,097		$	208,881		$	420,845		$	394,269
	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Operating income (loss) from operations:
LTL	$	(3,307	)	$	(1,182	)	$	(8,142	)	$	(256	)
SCO		2,371			2,337			4,469			4,427
Corporate office and other		(1,248	)		(1,396	)		(2,679	)		(2,905	)
	$	(2,184	)	$	(241	)	$	(6,352	)	$	1,266
	Three months Ended June 30, 2012			Three months Ended June 30, 2011			Six months Ended June 30, 2012			Six months Ended June 30, 2011
Depreciation and amortization:
LTL	$	3,742		$	3,630		$	7,476		$	7,579
SCO		318			368			634			734
Corporate office and other		24			42			49			84
	$	4,084		$	4,040		$	8,159		$	8,397